A deluge of earnings reports and two rounds of Capitol Hill testimony from Federal Reserve Chairman Alan Greenspan will flavor the week ahead. Besides dealing with more quarterly numbers, analysts think Wall Street also will continue to be concerned about a possible hike in interest rates -- though Greenspan could help calm some fears -- as well as the situation in the Middle East. These two factors could offset good earnings news and cause lackluster movement in the broader indices -- a trend that affected the prior week, analysts said. Daniel Morgan, an analyst at Noble Financial Group, called the market's movement "wishy-washy" in the past two weeks, even as investors have witnessed mostly solid earnings reports. He thinks Nokia's ( NOK) weak first-quarter earnings release on Friday and similarly weak forward guidance put a big damper on the market, which could carry into next week. Wireless carrier Motorola's ( MOT) results on Tuesday could help shed some light on Nokia's weak quarter, Morgan believes. If the company shows improvement in comparison with Nokia, then it could be that Motorola has taken market share from Nokia. Friday's results from Ericsson ( ERICY) will further reflect the state of the wireless industry, when compared with the results from Nokia and Motorola. Morgan said, however, that the news last Friday from Nokia won't be the only pull on the market early next week. "Some of the macro situations in terms of the Middle East and interest rates seem to be weighing on the market, creating this sideways movement where you would normally think earnings would be applauded," he said. "We're not seeing a lot of conviction on an aggregate basis." Paul Nolte, director of investments at Hinsdale Associates, agreed. "It's been a good trading market, but a lousy investing market," he said. "It's hard to peg day to day which way the market's going to work."
"Capacity utilization is not that big," said Nolte. "The Fed won't raise rates until capacity is at 80% to 82%. There's a lot of room there yet." On Friday, the Fed said capacity utilization dropped slightly to 76.5% in March from February's revised rate of 76.7%. As a result, Nolte predicted the market will continue to move back and forth over the next few weeks. On Friday, the Dow finished ahead for the week, up 0.1%. Meanwhile, the Nasdaq was down 2.9% and the S&P 500 finished 0.4% lower; both were down for the second-straight week. The earnings onslaught starts Monday with a quarterly report from 3M ( MMM). Morgan is expecting solid results from what he calls "the new General Electric ( GE) -- the new love of the Street." He cited the company's mature product lines and double-digit revenue and earnings increases. "It's really become a darling," said Morgan. "The CEO
W. James McNerney Jr. is being touted as the new top CEO, kind of like former CEO Jack Welch was with GE." Results from banks Wachovia ( WB) and Washington Mutual ( WM) also will be on investors' radar screens on Monday, both analysts believe. "I'll be looking for comments on the spreads," said Nolte. "Spreads have widened over the last two weeks even though rates have gone up." Home mortgage company Fannie Mae ( FNM) also reports on Monday. On Tuesday, another significant report besides Motorola is General Motors ( GM). Morgan is interested in how much money consumers are spending on new cars in light of the decline of consumer confidence lately. Another big automaker, Ford ( F), reports on Wednesday.
General Dynamics results should be interesting, said Morgan, because Wall Street could use them as "a gauge of how Bush's defense budget increases have impacted well-known defense players." Thursday will see major reports from PeopleSoft ( PSFT), SAP ( SAP), Amazon.com ( AMZN) and Kellogg ( K). Nolte is interested in what what Kellogg says about the commodity-price rally and how much of the price increases are being passed down to customers. "Margins shouldn't be damaged, and earnings should be impacted positively," said Nolte. Several pharmaceutical companies are reporting next week, including Eli Lilly ( LLY) on Monday; Boston Scientific ( BSX) and Pfizer ( PFE) on Tuesday; Wyeth ( WYE) on Wednesday; and Merck ( MRK) and Schering-Plough ( SGP) on Thursday. "We're starting to see
pharmaceuticals perk up this week for the first time in a while," said Nolte. "A lot of them have reached levels that were achieved a year or two years ago. It will be interesting to hear their pipelines ... earnings numbers should be in line with historical norms." Aside from Greenspan's speeches, economic news next week is light, with leading indicators for March to be released on Monday. The consensus is for an increase of 0.3%, compared with February's unchanged results. The Fed will release its beige book report on economic conditions on Wednesday, and durable goods orders for March will be released on Friday, with economists projecting a 0.7% increase compared with February's 2.5% rise. The producer price index also could be released on Friday.